For After your Bankruptcy Dismissal or Discharge:
I am frequently contacted by debtors who have survived bankruptcy. Most have successfully received a discharge, but some have faced
the unfortunate circumstance of having their case dismissed prior to discharge. The answers to the questions are presented here in
the order of frequency.
Rebuilding Your Credit
Your credit rating is a complex calculation of your debt history, debt to income
ratio, and other factors. Bankruptcy is considered a "negative" on your credit rating. However many people find that bankruptcy actually
improves their credit rating. The fact you filed bankruptcy will remain on your credit report for up to 10 years. If you apply for
credit, you will typically find one of three options out there:
1. creditors who love to give credit to people who have filed bankruptcy
and will gladly loan you money;
2. creditors who will not give you credit now, but will after ___ years from discharge (fill in 1,
2, 3, 4, etc. in the blank); or
3. creditors who will not loan you money because of bankruptcy.
The key to rebuilding your credit is
to have accounts in good standing (that means they are paid on time). It is best to have a mixture of debts, such as a home loan,
a car loan, and at least one Visa/Mastercard/Discover credit card debt. My advice is to read all credit offers VERY CAREFULLY and
if you are comfortable with the interest rate, annual fee (if any), penalties, payment schedule, and so on, and if the lender is reputable
and reports to the three credit bureaus AND most importantly if you can handle the payments, then go ahead and take the loan/credit
card to rebuild your credit. You may find that at first to get a credit card you must put down a security deposit. Try to find a card
where the security deposit is refunded to you after six or twelve months and even better if they pay you interest on it. A good way
to rebuild credit is to have a credit card and use it to buy gasoline or groceries and pay off the card every month in full. The goal,
of course, is to re-establish your credit rating, not to get back into too much debt.
You are entitled to a FREE
copy of your credit report one time per year visit www.annualcreditreport.com
(which is the official website - do not be fooled by
websites which claim to give you a free report but actually make you sign up for their services
). You are also entitled any
time you are denied credit or any negative action is taken against you because of a credit report. I recommend you get a copy each
year and every time you are denied credit. Review your report carefully. You will be surprised how many errors appear on there. My
report frequently shows me married to my mother and also addresses that I have never lived at. I dispute the information and it reappears
after several months.
If you find ANY incorrect information on your report (and you probably will every time) you should follow the
instructions on the report to DISPUTE the information. They are required to remove any incorrect information. However removal does
not mean they will not re-post the incorrect information later.
Creditor/Collection Agent Contact
Yes, creditors and collection agents may contact you after you file bankruptcy. Some intentionally
violate the law hoping you will send them money. If you have received a discharge, then the collection activity is most likely illegal.
You should immediately notify the caller that you have received a bankruptcy discharge regarding the debt and give them your attorney's
name and phone number. Document each time a collection activity occurs (name, date and time, what was said). You may have a right
to sue the person. Send us any information you receive and send us a copy of any documents you receive.
If you are sued
after bankruptcy you should IMMEDIATELY contact your attorney. You will forfeit your rights if you do not take immediate action.
Unless the Judge Orders otherwise, liens are not cancelled by bankruptcy. Typically liens are cancelled on cars and furniture
that are paid off in bankruptcy or on what are known as non-purchase money liens on household or business items. In Chapter 7 you
can also redeem property to cancel the lien. Secured creditors whose lien is not cancelled may try to contact you after bankruptcy.
The contact may be legal or illegal depending on what is said. For example, you may agree to continue paying a secured debt (such
as your home or vehicle) and once the debt is paid, the lien is cancelled. To protect your rights, you should contact your attorney
any time contact is made if you are unsure. Secured debts basically have two components: the debt and the lien. The debt is the money
you owe, such as you go buy a car for $10,000. You owe $10,000. The lien is the right to repossess the item if you do not pay the
debt. Using the car example, if you do not pay for it, then the creditor can repossess the car. Bankruptcy discharges the "debt" portion,
but not the lien (unless the Judge Orders so). Your attorney will explain to you what liens will likely be cancelled by bankruptcy.
If you paid for your vehicle in a Chapter 13 Plan, or if you redeemed or reaffirmed your vehicle in a Chapter 7 and have made
the payments, then the lienholder is required to release the title to you within 30 days. If they do not, please contact us.
Will a doctor continue to treat me after discharging debt to him? This is up to the doctor. If they attempt
to collect a discharged debt you have a right to sue, but they also do not have to treat you (subject to medical laws requiring
patient stabilization) if you discharged a prior medical bill to them.
Gary Cunha, P.C., Attorney and Counselor at Law
100 N. 6th #604, Waco, TX 76701 254-752-4279